FRANKFURT: Honda North America and BMW are closing plants throughout the U.S. and Europe this week due to an anticipated decline in demand for cars related to the global coronavirus outbreak.
Honda North America announced it will be closing four U.S.-based plants starting March 23 due to an anticipated decline in market demand. In a statement, Honda said it would halt production for six days with plans to return by the end of the month. The hiatus will reduce production by approximately 40,000 vehicles, the company said.
“As the market impact of the fast-changing COVID-19 situation evolves, Honda will continue to evaluate conditions and make additional adjustments as necessary,” the company said in a statement. “In undertaking this production adjustment, Honda is continuing to manage its business carefully through a measured approach to sales that aligns production with market demand.”
Approximately 27,600 Honda associates in North America will be affected by this temporary suspension of production, but the company said it will continue full pay for all its associates.
Honda said it will utilize the time to continue deep cleaning its production facilities and common areas to further protect associates upon their return to the plants. The hiatus will also enable working parents to adjust their lifestyles and determine how to manage the needs of children staying home, Honda said.
In Europe, BMW announced it has started to shutter its dealerships and plants, which will close by the end of this week. The interruption to the plants is scheduled to run until mid-April, the company said.
BMW said its production is geared toward sales forecasts, and the company is adjusting production volumes in line with demand.
“Demand for cars, like many other goods, will decrease significantly,” BMW said in a statement.
The factory closures come after the United Auto Workers union reached a deal with Ford, Fiat Chrysler and General Motors on Tuesday that would partially shut down facilities in the U.S. The actions are a compromise between the companies and the union after UAW President Rory Gamble on Sunday urged the automakers to cease production for two weeks due to the spread of the virus in the U.S.
It’s unclear at this time how the union and automakers plan to implement the “rotating partial” shutdowns. The union said it expects “more detailed information to be released in the next 24 hours.”
The coronavirus has now infected over 200,000 people across the globe and has killed at least 8,000 people. In the U.S., it has infected more than 6,400 and has killed at least 114.
CNBC